The Planning Minister, Anthony Roberts, met with the mayors of the Inner West Council and the City of Canterbury Bankstown last week, and committed to allowing the councils to lead the planning for changing land uses along the rail corridor.

The Sydenham to Bankstown corridor. Credit:NSW Government

However the decision to hand responsibility for strategic planning along the rail line, which is to be converted to a higher-frequency 'metro' rail service by 2024, was met with alarm by developer groups, who said it could jeopardise future housing supply.

The Labor Inner West mayor Darcy Byrne said the return of planning control to councils would derail property giant Mirvac's rezoning proposal for apartment towers along Carrington Road, Marrickville, near the Cooks River.

“We’ve fought long and hard to put an end to developer-driven planning proposals in this corridor,and today we are thrilled to take back control of planning for Sydenham, Marrickville and DulwichHill,” Cr Byrne said.

An artist impression of the proposed development in Marrickville. Credit:Inner West Council

However, Toby Long, Mirvac's general manager for residential development in NSW, said the company would continue to revise its plans, which he said would deliver a "world-class precinct" with a range of public benefits.

"We are looking at many months of work ahead before the proposal will be ready, but we take a long view and we are prepared to take our time to get it right," Mr Long said.

The councils will still have to plan to accommodate growing housing supply, but will initially do so through preparing new local environment plans.

Cr Byrne said: “Our new plans will be developed by the community, not multinational developers, because this is Marrickville, not Mirvac-ville,” he said.

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Mr Roberts said the state government "welcomes the opportunity" to let local councils lead the planning for the Sydenham to Bankstown corridor.

"I am confident that with your advice and involvement, we will successfully address the key concerns raised in relation to the revised strategy," Mr Roberts said in a letter to Cr Byrne.

Khal Asfour, the mayor of the City of Canterbury Bankstown, said the handing back of planning powers was "clearly a win for our community".

The decision follows Mr Roberts' announcement last week that the state government was considering charging developers a levy to help pay for new infrastructure in Sydney’s inner west.

Chris Johnson from the developer group, the Urban Taskforce, said the government had been spooked by community concerns.

"With an election nine months away it is clear that the government is happy to put the planning for new housing on hold," Mr Johnson said.